In this week's Stansberry Investor Hour, Dan welcomes Jonathan Rose to the show. Jonathan is the editor of Masters in Trading at our corporate affiliate InvestorPlace. He has a presentation where he's showing how he's tracking 20 stocks that have strong, unusual market bets right now. You can view this presentation here.

Jonathan kicks things off by sharing how his livestream show operates and how his Discord community has become a resource for newcomers. He then gives his trading background by explaining how he made 1,000 trades a day for the Chicago Mercantile Exchange and how that launched his career. He also mentions what's new on the market floor due to technology changing the way we invest. Jonathan next states what he looks for in his trades. He says the best traders should be able to explain why they're making a particular trade. For him, valuation is one of the things he looks for. And he likes to search for groups of five stocks that can rise together even if one is lagging...

I can't tell the future. I just look at valuation. I want to see something that's happening and I want to see another highly correlated product that's just dragging along. It's like a family of five stocks that always move together. I want to find that family of five stocks that's up 20% except one of them forgot, so it's like, "Wait! Wait for me!" But there always needs to be a reason for a trade.

Next, Jonathan discusses owning multiple ideas and having "relative trading" between stocks. He also believes that stocks aren't "expensive" or "inexpensive" in isolation – rather, they can be high or low, correlating to similar stocks. One of the things that Jonathan does when looking for new trades is following "unusual options activity" set by the biggest traders. It suggests that they know something about companies that most folks don't, and paying attention tends to pay off. And Jonathan cautions against making too many trades...

I like to share fixed-risk managed trades because if I start sharing the short side of trades and the market moves too much, then I'm going to be up [while my Discord community is down]... So I can't just share trades and share trades and share trades. What we do in the portfolio is share trades, and when a portfolio has enough risk, we don't share a trade. My concern is... everybody trades too much and everybody trades too big... Take it slow. Education mitigates risk. There's no harm in learning... Understand what's going on.

Finally, Jonathan advises treating trading like any other business and earn the right to buy more shares or place bigger trades. If you track your portfolio's performance and see that it's strong, it's fine to add risk. But if your portfolio is pulling back, you should be controlling your risk instead. Jonathan then shares four tickers and will explain why he's looking at them in his upcoming presentation. And he wants investors to understand that everything in the financial world is a derivative of something else and that you should find a way to express your opinion in whichever area you choose to invest in...

Everything [in the market] is just a derivative of something else. Options are just a derivative of stock. [Commodity] companies... are just a derivative of the cash price of [the commodity]. So, we use these different markets, whether they're stocks, whether they're ETFs, whether they're mutual funds, or closed-end mutual funds or open-end mutual funds. They're just a way to express an opinion... If I think gold's going higher, I'm really good at evaluating the different ways of expressing that and finding really great risk/reward for the people that follow me.

Click on the image below to watch the video interview with Jonathan right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

This Week's Guest

Jonathan Rose is a veteran trader and educator with more than two decades of experience navigating the fast-paced world of professional trading. He began his career in 1997 on the floor of the Chicago Mercantile Exchange, managing Nasdaq and S&P 500 futures during the height of the dot-com boom. And by 2003, he became the director of trading at a top proprietary trading firm, where he managed a team of traders and oversaw complex risk strategies.

In 2015, Jonathan launched Masters in Trading with a mission to bring Wall Street-level tools and techniques to everyday investors. His divergence-based trading strategy – which focuses on identifying price dislocations across correlated assets – has helped thousands of students spot high-probability trades and sharpen their edge in the market. His recent track record includes numerous short-term winners, including gains of 700% in 16 days, 245.13% in 25 days, and 183.78% in 14 days.

Dan Ferris:                 Our guest today is a rare bird. We hardly ever get these folks on the show and they look at the world totally differently than the average investor or trader that we have on the show. Our guest is Jonathan Rose. Earlier in his career, he made a thousand trades a day on the Chicago Mercantile Exchange. He's got that in his back pocket. And today, these days, he shares trades on a daily basis with live viewers. It's awesome. And he's going to tell us all about that. Get your pens and pencils out because not only is he going to drop deep market wisdom, he's got at least four ticker symbols to share today, and you'll want to write those down and look into them for yourself. So, let's do it. Let's talk with our guest, Jonathan Rose. Let's do it right now.

                                    Jonathan, welcome to the show. Glad you could be here.

Jonathan Rose:           Thank you for having me.

Dan Ferris:                 You bet. The first reason that we're having you – and one of my favorite reasons – is because what you do each day is the functional opposite of what I've been doing for 30 years. So, you're doing something completely different, and rather than me explaining that – what I mean, to the listeners, you and I talked before we hit the record button – I would rather you explain what you do each and every day. And just the simple fact that you do it every day kind of blows me away a little bit, I have to say.

Jonathan Rose:           I appreciate that. I didn't really know what I was getting into when I said, "Yeah, that sounds like a great idea." But every single day part of my routine is that we do an 11:00 a.m. Eastern time live show. I usually hop on 10 minutes early. It's kind of – it's really cool because everybody comes in, we have a whole chat, and everybody is "Good morning, good morning." And now, because the people have been doing it for so long, everybody is wishing one another good morning. And then, 11:00 a.m. Eastern time I go on. I usually yap for 15 minutes. They're trying to get me to go for longer but I'm not really good at just yapping. I really need something to be talking about. So, I go through my presentation. I talk to the chat. We'll field questions. And then I do it for 20 minutes free on YouTube and then everybody who's on our paid service we actually – we have a way of stopping the YouTube [stream]. So, I'm always like, "All right, I'm going to stop now, move on to my all access."

                                    And then, every single day for all access we actually have a community, and our community is in Discord, which is a whatever, just a community where – a place like an old Facebook group but instead it's a Discord or Slack. We use Discord. And then, when I move to the second part of the video, I open up Discord and everybody's like, "OK, Jonathan, I can see you. I can see you." And then we start going over some of our live portfolio, or I'll share more individual trades to our members. So, I think that's a pretty good synopsis.

Dan Ferris:                 I struggle to get out one new stock recommendation a month for two newsletters – so, twice a month. I struggle to do that. Some months, every now and then, once or twice a year, I say, "You know what? I got nothing." So, doing it every day is fairly impressive.

Jonathan Rose:           Early 2000s, Dan, I was doing about a thousand trades a day. So, one every other day is well in my wheelhouse.

Dan Ferris:                 Whoa, whoa, whoa, whoa, whoa. What were you doing where you made a thousand trades a day? Were you a floor trader or something?

Jonathan Rose:           You've seen the movie Trading Places?

Dan Ferris:                 Yes.

Jonathan Rose:           Yes? That was me down on the floor, hands in the air. That's how I got into the business. Yeah.

Dan Ferris:                 [The Chicago Board of Trade]? Or where?

Jonathan Rose:           I started on the floor of the Chicago Mercantile Exchange trading S&P futures.

Dan Ferris:                 Wow.

Jonathan Rose:           And S&P futures is one of the oldest pits in Chicago. I moved to Chicago. I didn't know anybody. I just knew exactly what I wanted to do. And I was trading in the S&Ps and it was right at the time that they were creating the Globex, the computer-based trading. And so, they had the S&P pit and then they had the Nasdaq pit. The Nasdaq pit was one-tenth the size of the S&P pit. But then they started putting computers around the pit, and those were the new electronic markets. And so, I was one of the first five people ever to trade the electronic markets for the Nasdaq. And when they put these computers on, it was a brand-new market. They were in such high demand, but they were first come, first serve. So, I had to get there at 3:00 in the morning, and then I would sleep on my computer until the opening, and then we would easily make a thousand-plus trades per day.

Dan Ferris:                 Wow. So, what you're doing – so, what I perceive as to be kind of a hectic schedule for you is like taking a nap. This is – a couple of trades every day at 11:00 a.m. is like – that's nothing to you. Right?

Jonathan Rose:           Well, that was in my early 20s when I broke into the business. My first five years, Chicago Mercantile Exchange. That – and I traded from '97 to '02. So, literally, the chart goes straight up and then goes straight down. And when it went straight down, volatility really got sucked out of the market. So, when volatility got sucked out of the market, [it was like being told,] "Traders, go find another playground to play in."

                                    In 2002, 2003, the Fed was starting to move interest rates, and I joined a firm, learned how to trade bonds, and I was the fourth member. We grew that to over 200 – over 100 traders, 200 employees. And we sold that in 2011. But that was all bond trading, but it was because that's where the real action was for Chicago traders, because the yield curve was moving so fast, the volatility was sky high – 2006, 2007, 2008, 2009.

Dan Ferris:                 Wow, that's impressive. We've had maybe two or three or four other folks who have had an experience like that earlier in their careers on the show in, I don't know – I don't know how many years I've been doing – eight years now?

Jonathan Rose:           Oh, very cool.

Dan Ferris:                 So, it's – yeah, it's a – it's kind of a rare thing for us to talk to somebody who's – who even has that anywhere in their resume. It's pretty cool. And it's mysterious to the rest of us, I have to say. It's like "What happens on the floor? What is all the hands and the yelling?" Do they still have the hand signals and the yelling or is it just computers have taken over?

Jonathan Rose:           Very, very little. Very – lumber options. Not lumber futures. Lumber options, yeah, they're going to still have some yelling and – well, yelling and screaming once in a while, because those markets are so incredibly illiquid. But overall, the people on the floor were just originally making markets just like they do for any public auction right now. They didn't have the capabilities of the computer, so people were just – if a stock traded at $100, somebody might be a buyer of $99 and a seller at $101. So, if a customer comes in and wants to buy, they're going to buy the $101. And if they want to sell, they're going to sell. And so, the floor traders have that $2 of edge every single trade.

Dan Ferris:                 Fascinating. Crazy. I have a respect for anybody who's been through that experience, survived it, moved on. So, let's talk more about your current trading style. If you and I met in a bar, let's just say, and I said – and you told me what you did and I said, "Oh, what do you do exactly?" – you told me physically what you do at 11:00 a.m. every day. But if I said, "What kind of investor or what kind of trader are you?" meaning what do you look for, what is it you're looking for, because every trader has something very specific. This is often a very interesting rabbit hole. So, let's go down there for you.

Jonathan Rose:           Yeah, it's a really good question. I always think that the best traders, the best investors are the ones that can really explain and define what they're looking for, or else they're just – everything becomes a good trade if they can convince themselves it's a good trade.

Dan Ferris:                 Yep. Yeah, a pure reaction. If it's not a plan – yeah. Which is too emotional.

Jonathan Rose:           So, I joined the MarketWise family in early 2024. I started Masters in Trading in 2015 just as like a hobby. And I used to only do high ticket coaching from 2015 to 2023, and then I joined in 2024. I definitely noticed that my approach is different than what MarketWise had before me. And I would say a core difference is there are brilliant people at MarketWise were really, really good at seeing five years, 10 years, even 20 years. There are people that are just mind-blowing and really embrace that label as a futurist.

                                    I'm the opposite. I can't tell the future. I just look at valuation. I just – I want to see something that's happening and I want to see another highly correlated product that maybe is dragging along. It's like a family of five stocks that always move together. I want to find that family of five stocks that it's up 20%, except one of them forgot so it's like, "Wait! Wait for me!"

                                    So, that's one example. But there always needs to be a reason for a trade. We follow – one part of my career I didn't mention was I spent three or four years on the floor of Chicago Board Options Exchange in Chicago, and that's where I really learned how to trade options. So, when I look at the market, I could trade stock – I could trade options. What I'm really good at is finding an investment and finding the proper way to express that. Sometimes we can buy the stock and sometimes it makes sense to use leverage and pay less and do an option trade. So –

Dan Ferris:                 OK, so I want to be clear, though, just for our listeners' sake here. When you find that group of five stocks and then you get the one laggard, is that generally a long for you? Is that generally you think it's going to catch up and ride along with the other stocks?

Jonathan Rose:           Sometimes. Not necessarily. But often if it's a really strong industry – like, right now, there's a floor under the energy industry. Oil is super strong. And it's only until there's real peace oil is going to keep a bit under it. So, right now a trade that we like, we're buying oil refiners, and we look for the cheapest relative oil refiner to buy. Right now, because oil refiners are so strong, we're not looking for anything to sell. But – this is probably above this interview or discussion right now, but there's something with a weird name called the crack spread. You can Google it: the crack spread.

Dan Ferris:                 Oh, yeah. Sure.

Jonathan Rose:           The crack spread is literally –

Dan Ferris:                 Three to one.

Jonathan Rose:           – the profit margin for oil refiners. So, if the crack spread is super strong, we're going to look for the cheapest oil refiner to potentially buy. Same thing in this example: If the profit margin for oil refiners that we can figure out through a mathematical calculation, if that's getting killed, then we're going to look for the most expensive refiner relative to the other one. So, that kind of trade, it's just an example of how we look at the market, but I always need an objective reason. I don't – I try to stay away from the "Trust me" or "I've got a good feeling" or "A double bottom right here." I want – I need more.

Dan Ferris:                 Yeah, I recommended the refiners in December. I'm thrilled with that idea today. I look very smart today, which doesn't happen often, so I'm going to crow about it as much as I can. And I also found – I started looking further and further into the industry and I found chemical suppliers to the refiners, which I feel enjoy even more deeply embedded competitive advantages. And the refiners have great competitive advantages, namely you're not allowed to build one. And that's the big one. And the chemical companies are similar.

Jonathan Rose:           And another thing that we like to say is, "The creative trader wins. The creative investor wins." So, just like that, the refiners, it's building on an idea because it's not just the refiners; there's a fertilizer glut as well. So, if you could own the two of them and then you start really narrowing down and figuring out where is that supply pressure, and then you want to get a position that properly expresses what you really feel. And I think a lot of people will be in a trade – and oftentimes in our community, we'll ask, "Why?" You should be able to – I want to be able to write down the reason of why I'm in a trade. And what are those reasons? Refineries are ripping higher. This one is correlated with the other ones, but it hasn't followed along? That's a good reason.

Dan Ferris:                 Yeah, sounds good to me. That's – this sounds very much like reversion-to-mean trading. Lots of folks – many, many of our guests have expressed just how reliable the trade has been for them over many, many years. It's really a persistent thing. So, they get something that's below trend, it reverts up toward the trend, and vice-versa. Very, very similar to what you just described. But would you call those reversion to mean? They sound slightly different to me. No?

Jonathan Rose:           Well, similar.

Dan Ferris:                 Similar.

Jonathan Rose:           Every single step throughout my career I've always traded – it's relative value. It's also called pair trading. Relationship trading. And so, there is quite a bit of reversion to the mean. But the key – and it all comes down to nothing is ever expensive; nothing is ever inexpensive. We don't use those words. You can only be expensive relative to something else. It can only be inexpensive. A home can't be just expensive. Maybe it's expensive relative to all the homes on the same exact street. But sure, a home in New York is going to be expensive [relative] to a home in rural Kansas if you're just looking at them apples to apples.

                                    So, it's trying to retrain how people look at things, because there's a funny meme, which – one of my favorite scenes, the movie Major League, the funny baseball movie, I don't know if you remember in the beginning of that movie, Pete Vuckovich, I think, hits a home run for the Yankees and the guy in the stands says, "Oh, that can't be out. It's too high. It's too high." And then another guy says, "What do you mean, too high? It can't be too high."

                                    So, if a stock keeps going high, it doesn't mean it's expensive. It's – maybe it's high relative to – what's it correlated to? What's the reason of why it made that move? Because maybe it's not expensive. Maybe it's just high.

Dan Ferris:                 Relative to others. OK. That –

Jonathan Rose:           Tie it down.

Dan Ferris:                 Pardon?

Jonathan Rose:           I was going to – tie it down. A car cannot be expensive in isolation. Everything that we do in life is relative. We price compare. It's the same thing.

Dan Ferris:                 I see. So, when you say tie it down, relate it to something else. Yeah. OK.

Jonathan Rose:           Absolutely.

Dan Ferris:                 Makes a lot of sense. Makes a lot of sense as a trader. And we do the same thing. Even us bottom-up fundamental guys, when we say we think a stock is worth somewhere, $75 a share, let's just say, 5% either way, it's a range of values. That's always with a knowledge of what does the people in that industry – what do the people in that industry think such a business might be worth based on what they've actually paid for other similar businesses? We're not just pulling it theoretically out of nowhere. It's relative to the other businesses in the industry. You always have to relate it to reality. And ultimately, what you're telling me, Jonathan, the market is the final say. The market tells you what things are worth no matter what you think

Jonathan Rose:           Yeah, and it's – it helps you not fall in love either. Somebody might come on the show and say, "Hey, what do you think about ABC?" I'm like, "Why? What's the reason?" There always has to be some substance behind it. So, I have a difficult time with a random ticker using technical analysis. That's not going to be my gig. But when I – something we also do, which pretty much is the foundation of how I trade options, is we follow unusual option activity. And that's just following the biggest traders in the world. If we see a $10 million trade on a trillion-dollar company, that might not be as exciting as a $10 million trade on a $2 billion market cap company. That – somebody probably knows something because you don't get to do that – you don't get to be wrong that many times trading that size on those kind of companies. So, those are trades that we're always looking for, always looking for really big trades, or even big insider trades, always relative to the company's market cap, because it's two different analyses, if it's a $2 billion company, or if it's Tesla, these trillion-dollar companies.

Dan Ferris:                 Right. Interesting. I've heard a lot of that about people watching crazy, unusual – there's a lot of folks on Twitter who are posting "Look at this great – look at this $30 million option trade" or whatever it is. It's interesting to someone.

Jonathan Rose:           CNBC likes to do that as well. The trick, I would say, which is not a trick, is interpreting that information, because calls aren't always bullish – puts aren't always bearish. And these institutions know that people want to follow their orders because it's not a fair market. We know that, that the information that's around isn't fair. We hear about all this frontrunning, whether it's before the Strait of Hormuz got shut down, whether it's Congress frontrunning. So, the markets are somewhat transparent, especially the options market. So, you can see those orders coming to the market. You just have to know what to look for. But I'm sure anybody watching this doesn't think that it's a fair playing field in the market. We have to be able to even the playing field somehow. And I've found that following those orders puts us in a pretty good position to succeed, rather than trying to figure things out on our own.

Dan Ferris:                 OK, so now we have a good idea of what you look for. How long do you generally stay in a trade?

Jonathan Rose:           Everything depends on the time frame. I would say in our main service that we look for unusual option activity, the average time that we're in those trades of the last two years has been, I think, 32 days. So – but we'll take a trade off in three days if it really works out. And usually, whenever we're in an option, we're always buying options. I teach people how to buy options where you can – where you're risking a fixed amount and we're trying to go after bigger returns. So, often we're looking for 2-to-1, 3-to-1, 4-to-1 returns. But the cool part about this trade is because we're buying options and buying premium, you know if an option's trading at $2.50 it's $250 per one lot and you're making that decision that – about the risk before you get into the trade. And options have time.

                                    So, if that option has 90 days, well, that trade has a higher probability that it could potentially go to 90 days. If somebody wants a shorter-term trade, that's not the trade for them. They should be looking for a trade with a 30-day expiration because that's another bit of a sucker's play, if you don't mind the word, that often people will buy a 120-day option and the thing works in three days and they get out, and fine. But you have a hundred – use your time. That's – you can use that on your side. That person probably should have elected to buy a five-day option. So, all things that – as people come in and start hanging out a little bit, education mitigates risk. The more people learn, the more people are open, without a doubt. That translates to a reduction of risk by just understanding what's available in the marketplace.

Dan Ferris:                 Yep. This is where we always wind up with traders, and my listeners are probably getting tired of me telling them this is where we always wind up because I always say this. And it's because it's so critically important and underappreciated. The average person who is not a professional with lots of experience like yourself thinks "Well, I want to figure out how to make a whole lot of money real fast and that's what trading is about." But it turns out that it's not about that at all, is it? It's about what you just said, which is managing risk and staying alive to get the returns in the first place. Maintaining the account and keeping it alive to get the returns in the first place without catastrophic losses.

                                    I assume you use the usual tools, but you just mentioned limiting the risk with a position size. You buy one option, $250, the most you'll lose is $250. Do you – I assume you also then use trailing stops. Is there anything else? Or do you or don't you? And then, is there anything beyond that that you use for risk control?

Jonathan Rose:           It's a great question. And it sounds so scary, but I do not use trailing stops at all, because in this example, if an option is $250 and if I want to risk $250, that's my choice when I get in there. When you're trading options, you can't risk $500 and then stop yourself out for $250 in the style that we trade. And also – wink wink – you really – so, what I want people to do is if you want to risk $500, buy a two lot. Don't buy a four-lot for a thousand dollars of risk but then you say in your mind – because markets gap, markets move too fast. So, I want guys to manage their – manage risk at the portfolio level and not at the individual trade level because it's – it becomes a little bit confusing because if somebody has five trades on, they have risk of five trades on – that's their risk. It doesn't matter the individual components of those trades.

                                    So, I always say it's not about having all these different silos of trades. You have a portfolio. So, a great way to learn how to trade options or to start using options is maybe there are two bullish trades, maybe there are two bearish trades, and that is the offset that you have. And then you just wait. Maybe the market rallies in time, the long starts working, you could take that off, and now you're out there hunting for your next trade. But you earn the right to get to the next trade. We're not just putting a whole bunch of trades on, because that's what gets people into trouble, from my history of working with a lot of different people.

Dan Ferris:                 What I'm hearing is that that idea of managing the risk at the portfolio level, not the individual position, makes so much sense for options. The volatility is simply too great. You can't say, "I'm going to stop out when I get halfway" because you can go from what you paid to 10% of that just like that. You can be down 90% just like that. "Oops, I kind of blew through my stop."

Jonathan Rose:           Execution cost.

Dan Ferris:                 Yeah.

Jonathan Rose:           Yep.

Dan Ferris:                 So, that's a great point. I'm glad you said that. Are you always buying options or are you selling them, too?

Jonathan Rose:           Great question. For the services, I'm always on the long side of buying. So, we will buy options and then we will sell options to manage those trades. That's called a vertical spread. So, we'll do that, which allows people to stay in the trade a lot longer. Without that people have a lot difficult time because there's a lot more risk. But just outright selling of options we don't really do because just the risk is too much if they're trades that I'm not really willing to do myself.

                                    We do buy stock quite often. But as far as the options, I like to share fixed-risk mounted trades because if I start sharing the short side of trades and the market moves too much, then I'm going to be up. And the other thing, which is quite different, is I have over a thousand people in my Discord community. So, if I share a bunch of trades and they're getting their butts whooped, I'm not going to have a good time checking that Discord every day. So, I can't just share trades and share trades and share trades. What we do in the portfolio is we share trades and when the portfolio has enough risk, we don't share trades, because my concern – and I know from teaching so many traders – is everybody trades too much and everybody trades too big. And if that happens, people are going to come into my community when they buy – when they come in for a year commitment, in the first month a trade's going to go against me, and they're going to say, "Jonathan, I don't like you. You're not what you said you are" and this and that.

                                    And so, take it slow. Education mitigates risk. There is no harm in learning. And if anything, the people in the Discord community, they might present the FOMO, but because they're excited and they're having fun but understand what's going on. That's why I do a live show every day, that there is some hand holding that needs to be done. And by having the community, I don't necessarily have to do it all. I have others who have been with me for three-plus years who understand what we're – understand all the education and it's a – it's really become a team effort.

Dan Ferris:                 That's cool. That's cool that you have that community built up. So, I want everyone to write that down: "Everybody trades too much, too often. Everybody trades too big." And don't do that is the point. Everybody does. That doesn't mean you should do it. It means that that's a big mistake that Jonathan just told you. And it's the same, Jonathan, with anybody who's got a stock portfolio, that they think they're just going to buy stocks, not necessarily trading options on a quick basis like you do. People who think they're going to hold stocks for years usually don't. They trade too much, too. And they trade too big, too.

                                    And it's – and I've seen – you and I probably know plenty of people who thought they could be a professional fund manager or something and trade big and they put half their fund in something and they're out of business a year or two later. It's just like this is not something that you should ever mess with. The times you've heard that it goes right, there's 10,000 times that it went wrong and people got ruined. So, don't trade too often and don't trade too big. Period. Those are hard and fast trading rules. They're not sexy but they've got teeth, don't they?

Jonathan Rose:           They absolutely do it. I think it's important to treat your investing or trading just like any other business, and you earn the right to buy more inventory. You earn the right to trade a little bit bigger. Something that we always used to do on the floor, and I always suggest it for people who are starting off, or even if you're not starting off, if you're frustrated with the rhythm of your returns, try charting your [profit and loss statements]. Chart your own performance. And when that chart is strong, that's when you could add risk on. But when that chart is pulling back, never add risk. That's when you control risk. That's when you slow down.

                                    So, that's something that I've always done throughout my career. I highly suggest people coming in and even – we have paper trading exercises, too. Hey, make $300 for a week. Earn the right to try to make $600 on paper for the week. If you could do that, then start real small. But doing all these little things so you're not just forcing yourself in there. You're proving to yourself that even little things – like somebody will get into a trade, it goes their way, they're up 100%, but they don't know how to get out or they don't know what to do, and they start asking everybody in Discord, which is great. Everybody helps them. But people are always going to say, "Hey, slow down. It's OK." And the tools available for us that we can paper trade and learn are getting so much better. It's just a matter of being open to try things that are a little bit different.

Dan Ferris:                 Yeah, you remind me, I had a relative years ago who used to – found out what I did for a living and said, "Can't you just tell me a way to make a quick $5,000?" I'm like –

Jonathan Rose:           Just one stock.

Dan Ferris:                 If I could do that, I'd do it as big as I could and I wouldn't settle for $5,000.00 I'd want $50,000 or $500,000. And I'd do that 25 or 100 times and never do anything else again as long as I live. So...

Jonathan Rose:           That's what we're searching for. We're searching for a little bit of edge. And once in a while, you can find it and that's when you can hit it really hard. A big edge right now is a trade that you mentioned earlier: oil, fertilizer. There's not enough of it. Those prices are going higher until things settle down. There's a floor under those instruments right now.

Dan Ferris:                 Yeah, there's – I thought most people knew by now oil is not by any means the only thing that goes through the Strait of Hormuz. It's like sulfur, urea, ammonia. There's a bunch of stuff and that's – there's probably other ones that I – helium, I think, is – was affected by what's happening over there. Helium doubled right quick actually, so I know it's affected. And it's – there's plenty of stuff to trade. We had recommended a fertilizer stock. Well, that was a while ago but it was nice to see it performing again.

Jonathan Rose:           There's a – yeah. So, I'm looking for these things all the time. And earlier today I was looking – there's a site that I use, I'm not affiliated in any way, it's called tradingeconomics.com.

Dan Ferris:                 Oh, yeah.

Jonathan Rose:           Under "Data," you can go under "Commodities." It's a great place to find the cash price of random commodities. And so, I noticed bitumen – "bitumen," I think, is how you pronounce it –

Dan Ferris:                 Yeah, bitumen.

Jonathan Rose:           – is up – bitumen is up 5%. You probably know. I don't know what bitumen is. And what bitumen is, I guess, is the oil sands. It's that really heavy tar-like sand.

Dan Ferris:                 Yeah.

Jonathan Rose:           So, bitumen. OK. Energy is getting lifted all over. Maybe this is one area where the names haven't really moved. And so, knowing bitumen is making a 5% move intraday, I go and look up all the different stocks that are pure plays where that has the most exposure. So, things that – I'll throw them out there, a little basket: SU – ticker symbol SU – ticker symbol CNQ, ticker symbol IMO, and then CVE is another one.

Dan Ferris:                 Cenovus, yeah.

Jonathan Rose:           So, all great names that are tracking the price of bitumen. This is the biggest move – it's kind of fun to say – bitumen has made all year. So, things like that, it's just the creative trader wings. I love where it's something that I haven't looked at. The only reason I haven't looked at is because I've never seen it have an intraday move like that. So, I looked into it deeper and those stocks, they haven't moved necessarily like the oil – they shouldn't, but maybe those stocks, it's time to get a bit under those.

Dan Ferris:                 Yeah, when Venezuela became a became a big topic, I went down the rabbit hole a little bit with heavy sour crude, which is basically what we're talking about, and found out that it's – when we pull oil out of the ground in the U.S., it's liquid. We do fracking and a little bit of conventional oil production these days. And it's – and we pull this liquid and we pull natural gas and stuff out of the ground. Heavy sour is like the consistency of refrigerated peanut butter. It's a mining operation. It's totally different. Completely different. Different methods of getting it out of the ground, different pipelines, different processing, different everything to turn it into something that you could then ship to a U.S. refinery on the Gulf Coast set up for heavy oil. But I did not know – so bitumen actually trades as a commodity?

Jonathan Rose:           Yes.

Dan Ferris:                 That's weird. I did not know that.

Jonathan Rose:           Yeah. I didn't know that either.

Dan Ferris:                 Yeah. OK. Everything –

Jonathan Rose:           Even more so – not surprising from my standpoint that I didn't even know what it was, but we used to even joke around on the floor when we would hear – even understanding the intricacies of what goes on behind the scenes and the different weights of oil and – I'm just a squirrel trying to get a nut. And so, when I see a big move in an underlying community, I know that people don't see that. So, I'm just "What's going to react? What's going to react?" because there's always this delayed – everybody starts following along. And I guarantee you if bitumen's up 5% tomorrow, the newspaper – the newspaper? – the media is going to start picking up on it. And then everybody's going to say, "How do I invest in that?" And they're going to do exactly what I did. It's just trying to get to those stories first.

Dan Ferris:                 Right. The wise man does in the beginning what the fool does in the end. So, we've covered a lot of good stuff. You've actually done a just brilliant job of giving readers a few fish as well as teaching them how to fish. Are – the bitumen stocks, are they a current trade for you? And if not, is there a current trade that you can share? If not, it's cool. But I always have to ask because our readers are hungry for tickers. I promise you, they wrote down the four stocks that you said before and they're hungry for more if you've got them, just to let you know.

Jonathan Rose:           This was my research today that I decided not to share with everybody. Actually, later in the week, I'm going to do a presentation on bitumen and trading economics. So, I'm not sure when this is released, but after it's released, we'll do two days after – Dan, we'll touch base and then I'm going to do a live presentation. So, I'm going to share those – I think they're great and I'm going to share those: SU, CNQ, IMO, CVE. And then, I'll show you exactly how I'm analyzing these names because I'm going to look at them relative to one another. But don't – you don't have to jump in there. You're not going to miss anything. Start watching them. And then, come to the show and we'll break it all down. So, hopefully that helps. Yeah, those four names I really like and I haven't – it's the first time I've ever mentioned them.

Dan Ferris:                 Oh, OK. Great.

Jonathan Rose:           Yeah.

Dan Ferris:                 We are at our usual time of asking the final question. Now, the final question is a very special thing on this show, John. I've been doing this since the – practically, the very beginning when I took over in 2018. And it's very simple. It's for our listeners' benefit. And it's – this is the same identical question we ask every single guest no matter what the topic. Even nonfinancial topics, I would ask them this identical question. So, the question is simply if you could leave our listeners with a single thought today, just one idea, what would you like to leave them with? What would you like them to take away with this?

Jonathan Rose:           That is an excellent question. And I know exactly. And it's the same thing that I've been talking about at MarketWise as well. I've been doing – I've been in the financial markets since 1997 and the biggest thing that I've learned trading futures, stocks, options, crypto – you name it, I've risked money trading it – but the one thing that I've learned is that everything is just a derivative of something else. Options are just a derivative of stock. These bitumen companies that I shared, they're just a derivative of the cash price of bitumen.

                                    So, we use these different markets, whether they're stocks, whether they're ETFs, whether they're mutual funds or closed-end mutual funds or open-end mutual funds, they're just a way to express an opinion. Some of those ways are – have a ton of fees. Some of them have a ton of volatility. There's different ways to express. What I'm really good and what I look at the financial markets are – when I have an opinion, if I think gold's going higher, I'm really good at valuing the difference between all the different ways of expressing that and finding really good risk/reward for the people that follow me. So, that's my biggest message. It's all derivatives and they're just trying to sell you different things to trade, but it's all the same thing. You just have to find the optimal way to express that opinion.

Dan Ferris:                 All right. That is a great point. I don't think anyone has ever really eloquently focused in on that point like that. Always – basically, always look at the underlying. What is the underlying thing really being traded here? Is it the stock or is it the commodity, just in the example of the bitumen?

Jonathan Rose:           Core principle, yeah. What's moving? What are we doing here? Are you trading a proxy of bonds? Are you trading a proxy of Brazil because China is messing with Brazil? Where's your risk?

Dan Ferris:                 Yeah. Hey, that is – that's one of the great answers that I've heard lately. That's really good. So, thank you for that. And thanks for being here, man. It was really great to talk with you.

Jonathan Rose:           Absolutely. It was a lot of fun. Thank you for having me.

Dan Ferris:                 Here's something I want you to do the second this episode ends. Our guest, Jonathan Rose, 25-year professional trader, former market maker, that guy we just talked to, yeah, he has a tool right now that's showing the 20 stocks where the biggest, most unusual options bets are hitting the market. So, we're talking about the kind of activity that happens when someone with really deep pockets knows something, and he's letting our listeners see that list today at no charge. You'll see the stocks. You'll see the scores. And you'll see where the smart money is leaning right now today. Go to investorplace.com/investorhour. That's investorplace.com/investorhour. It's live and it updates, so go take a look.

                                    You have to admit that was different and kind of cool. This guy goes live online every day and shares trades with his viewers. I think that's amazing. And the idea that he once made a thousand trades a day, to me, is just insane. I guess that's the life of a market maker. And you have to learn things doing that that just most of us will never know. And it's probably embedded in his DNA at this point after doing this stuff for decades. And he shares all that knowledge every day online live with his readers. That's pretty amazing, actually. It's something so the opposite of what I do, picking stocks for the long term and doing the deep fundamental research, all those things that he said he does not do really. That is incredible. It's just two completely different ways of coming to the market, isn't it? And yet it's so cool that we can arrive at the same place.

                                    This happens a lot with me. I tell people I'm a bottom-up fundamental investment. "Well, I'm a short-term trader." And then, where do we both go? To energy stocks. And he shared with us four ticker symbols. You probably wrote them down. SU, CNQ, IMO, and CVE. Four companies that have exposure to the bitumen market, the heavy oil sands that we talked about during the show. So, if you're interested in that trade, of course, there you go. And Jonathan – after this airs, Jonathan's going to do a presentation on his show to tell his viewers all about this. Pretty cool stuff.

                                    I hope you enjoyed it as much as I really, truly did. I thought it was just great. And that's another episode and another interview here on the Stansberry Investor Hour. Remember to hit like and remember to hit subscribe and remember to sign up for our free daily e-mail.

Announcer:                 Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stansberry Research, its parent company, or affiliates.

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